'Flood' of fake Chinese parts in U.S. military, according to Senate report

Hugh Lessig

Bogus electronic parts from China have infiltrated critical U.S. defense systems and equipment, including Navy helicopters and a commonly used Air Force cargo aircraft, a new report says.

A Senate Armed Services Committee analysis "exposed a defense supply chain that relies on hundreds of unvetted independent distributors to supply electronic parts for some of our most sensitive systems," according to an executive summary of the report.

Various military aircraft were named in the report, including the Navy SN-60B Seahawk helicopter and the Air Force C-130J cargo airplane. Fake components were also suspected in the the Navy Integrated Submarine Imaging System and the Army Stryker mobile gun.

It was unclear Wednesday how the problem, or its aftermath, would affect the many military installations in Hampton Roads.

The report uncovered 1,800 cases involving counterfeit parts, with the sheer number of fake components suspected to exceed 1 million. Of the 1,800 cases, investigators tracked more 100 back through the supply chain, and the "vast majority" of those trails led to China, the report says.

Among the problems that investigators cited: repair costs driven into the millions after fake components had been installed; supply chains so complex that contractors knew little about the original source of the parts; and the possibility of a missile failure due to a fake computer chip.

Sen. Jim Webb, a committee member, co-sponsored an amendment last fall to the national defense bill "which required more aggressive anti-counterfeiting practices from the Defense Department and the defense industry," read a statement from his office."He will continue to push for greater oversight to ensure the safety and effectiveness of the equipment on which our military relies."

Rep. Randy Forbes, R-Chesapeake, co-chairs the Congressional China Caucus and said fake parts from that country are "an insidious problem plaguing the U.S. defense supply chain."

"The rising incidence of these forged components on defense contractors' production lines has serious implications for national security, the safety of our men and women in uniform and the viability of the American defense industrial base," he said.

Case study: Navy helo

The committee looked at three cases in-depth where counterfeit parts from China wound through the supply chain and ended up in military hardware.

One involved the Navy SH-60B, which conducts anti-submarine and anti-surface warfare, does surveillance and provides targeting support. It deploys on Navy cruisers, destroyers and frigates.

On Sept. 8, 2011, defense contractor Raytheon alerted the Navy that suspect electronic parts had been installed on three units that were incorporated into a Forward Looking InfraRed system (FLIR) used for low-light and night-time operations.

The FLIR system is not considered "flight safety critical," the Navy told Senate investigators, but a failure would reduce the ability to identify hazards and targets at night, hampering the ability to conduct night-time operations.

This example provided stark evidence of the twisted supply chain. The suspected counterfeit parts changed hands five times before Raytheon purchased them. The parts originated with Huajie Electronics in Shenzhen, China, "a fact that neither DoD nor Raytheon were aware of prior to the committee's investigation," the report said.

The Navy eventually used the three suspect parts as spares

Case study: Air Force cargo plane

L-3 Display Systems manufactures display units for Lockheed Martin, the prime contractor for the Air Force C-130J. The units provide information on engine status, fuel use and warning messages.

In November 2010, L-3 Display Systems detected the in-house failure rate for a chip installed in the system had more than tripled, from 8.5 percent to 27 percent. It had already installed parts from the suspect lot on more than 400 of its display units. The company immediately quarantined its stock and notified Lockheed Martin.

The Senate report said Lockheed decided to take no action. Its engineers determined that the suspected bogus part posed no short-term increase in risk. They also noted the parts had passed an environment stress screening, where parts are subjected to heat, vibration and other stresses as a way of detecting whether or not they are defective.

The report also says that while Lockheed Martin raised the issue with the Air Force in a conference call, the company's representatives "apparently told the Air Force engineers that the 'chips have been tested and found to be authentic, but remarked.'"

"That distinction was apparently later repeated by Lockheed Martin personnel, leaving the Air Force with the false impression that the memory chip was not a counterfeit," the report says.

Lockheed Martin spokesman Peter Simmons said the company has been cooperating with the Senate's investigation.

"The company fully supports the government's goal of preventing the incorporation of counterfeit parts into the systems it procures, and Lockheed Martin works with its supply base to prevent such occurrences," Simmons said in a statement." For those few instances where Lockheed Martin has received systems from its suppliers containing suspect parts, the company worked with its government customers to ensure that flight safety and operational effectiveness were not compromised."

Lack of reporting

One way to avoid buying fake parts is to know which companies and parts are suspect. The Defense Department has a program to exchange information on that very issue, called the Government-Industry Data Exchange Program, or GIDEP.

However, reports to this program are lacking. While the Senate committee identified 1,800 cases of suspect counterfeit parts in 2009 and 2010, only 271 reports were submitted to GIDEP during that period.

Read the full Senate Armed Services Committee report at hrmilitary.com, home of the Hampton Roads Recon military blog.